Question: You analyze two mutually exclusive projects and get the following results: Project A: NPV: $1,000,000; IRR: 10%; discounted payback: 4 years. Project B: NPV: $250,000;

You analyze two mutually exclusive projects and get the following results:

Project A: NPV: $1,000,000; IRR: 10%; discounted payback: 4 years.

Project B: NPV: $250,000; IRR: 15%; discounted payback: 3.5 years.

The companys discount rate is 8% and its discounted payback limit is 3 years. Which project should you select or recommend?

A. Project A because it has the higher NPV

C. Project B because it has the higher IRR and the lower discounted payback period

D. Neither because their discounted payback periods are too high

B. Project B because it has the higher IRR

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